Many small business owners believe that the only way out of a tricky financial situation is a small business loan. But there are alternatives that can have your business making progress without becoming a slave to your small business loan source.
Discover the main reasons why getting a loan to start a business should be avoided and how to get the capital you need without paralyzing interest.
Think Twice Before Securing a Small Business Loan
When used appropriately, small business loans can help you purchase inventory and equipment or consolidate debt to help your business make positive financial strides. But there are several negative factors to consider before signing on the dotted line.
Interest
The average interest rate on a small business bank loan ranges between 5% and 13%. Because it can take a new business several years to turn a profit, paying interest will only hold a business back. Interest is like eating a cheeseburger while walking on a treadmill. You might be moving in the right direction but you’ll never get the results you’re after.
Additional Monthly Costs
If you’re taking out a small business loan, you’re probably already struggling to keep up with monthly business expenses as it is. Adding another monthly payment is just digging yourself deeper into a financial hole. Some new businesses never find a way to get out.
Long Wait Time
If you need money today, a bank loan isn’t the solution you’re looking for. Bank loans typically take at least 60 days to be approved and that’s at an expedited speed. Then there’s the wait for the actual funds. If you need inventory or equipment right away, you can see how a bank loan can actually slow down your progress.
Collateral Requirement
Not all bank loans require collateral but if you’re required to provide your lender with this type of insurance policy, you might be tempted to risk your personal assets in an effort to secure the loan. For example, banks could ask for your home, cash savings accounts, or business assets as collateral. No matter your confidence in repaying back the loan, this is still a dangerous risk.
Are You Seeking a Small Business Loan for the Wrong Reason?
If the previously mentioned pitfalls of business loans don’t overly concern you, make sure you’re not seeking a loan for the wrong reasons.
To Pay Your Bills
Business loans should only be used to help a business expand and grow. They should never be used to pay the bills of a business. Because of interest, you’ll end up spending more in the end but won’t have anything to show for it.
“Because I Can” Syndrome
Maybe you were personally approached by a bank representative or received the promise of a great introductory interest rate in the mail. Either way, just because you’re approved for a loan doesn’t mean you should automatically take one out. Unless you have a thorough plan for the funds, including a detailed repayment schedule, the loan won’t be spent wisely.
Waiting for your Windfall
If you’re just starting your small business or are having difficulty making ends meet, you might be working for free. It is recommended that you have up to 12 months of living expenses saved up before launching your new business. If you’re starting to stress about personal finances, focus on finding ways to cut personal costs rather than turning to a loan. Otherwise, you could find yourself on a financial hamster wheel – exhausted but stuck.
Ready to Skip the Small Business Loan and Do This Instead?
So if you can’t turn to the bank, what can you do to put your business in a better financial position? Join Tradepay, where you can purchase the inventory and support your business needs to grow without being bogged down with interest, high monthly payments, or the stress that comes along with bank loans. Here’s how it works.
Join Tradepay
Joining Tradepay is easy. There’s a quick sign-up form where you’ll enter all your basic information, including a description of your business.
It’s free to join!
Browse Other Businesses
Look for businesses that provide the inventory, equipment, or services that you need. Whether you’re a marketing provider in need of business cards, a tree trimming company in need of climbing gear, or a drop shipper in need of new inventory, there’s something for everyone on Tradepay.
Make a Purchase
Here’s where it gets interesting. When you make a purchase on Tradepay, you’ll pay for your transaction in both real cash and virtual currency called Trade Dollars. For example, a $100 order would cost $60 in cash and $40 in Trade Dollars (plus a small transaction fee).
This allows you to get more for bang for your buck without compromising on the quality or number of products or services your small business needs.
What are Trade Dollars and How Are They Earned?
Trade Dollars are the equivalent of $1 USD. They’re virtual and can be transferred between businesses using Tradepay’s platform.
There are three main ways of earning Trade Dollars. You can:
There is NO INTEREST accrued on your Tradepay account.
Approval is fast and simple (apply with a single click) and the virtual currency is available immediately.
How Tradepay is Changing the Small Business World
To give you a better idea of how this revolutionary concept works, take a look at how the Tradepay platform can help a new business make progress.
Joe’s Catering is ready to open shop. There’s just one problem. Joe still needs to buy some additional equipment for his business. But he spent most of his start-up funds on securing a location. Instead of heading to the bank, Joe signs up at Tradepay.
Joe is able to buy pots, pans, serving equipment, and everything else he needs at wholesale prices by paying with 60% cash and 40% Trade Dollars, which he acquired through a Tradepay loan. Before he knows it, Joe has catering jobs lined up for the rest of the year and he’s earning profits faster than he ever would.
Joe’s able to pay back his Tradepay loan by selling some of his famous bottled BBQ sauce through the platform. While his local sales are great, Joe never dreamed he could reach so many new customers at one time. He’s hoping to take his brand to the national level, all thanks to simple Tradepay networking.
Tradepay is ideal for all types of businesses, including those who work only on the local level and those who have taken their business global.
Do yourself (and your business) a favor and skip the paperwork and insane interest rates by using Tradepay. You’ll be able to secure supplies, inventory, and support for your small business without being held down by a loan. Visit Tradepay today or learn more here. (add links to new site)
